A Bull In China: Jim Rogers' Latest Book on China's Growing Importance

Although I have been busy recently and not trading much, I recently finished A Bull in China: Investing Profitably in the World's Greatest Market. I thoroughly enjoyed Jim Rogers' latest book. I am a Jim Rogers fan who has also read his prior books:

• Investment Biker: Around the World with Jim Rogers;
• Adventure Capitalist: The Ultimate Road Trip; and
• Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market

Jim Rogers' prior books serve as a good background to his latest book. His early travel, adventure and investment books discuss different themes as he traveled around the world, first by motorbike with his then girlfriend Tabitha and second by his customized Mercedes car with his then girlfriend now wife Paige. Regarding his second trip, I strongly urge you to visit Jim Rogers — The Millennium Adventure website to see Jim's and Paige's phenomenal trip. His third book discussed commodities, in which China plays an important role as a user of commodities.

A Bull In China has the following sections and chapters:

• Introduction: Catching the China Ride;
• Investing: From Mao Caps to Small Market-Caps;
• Risk: The Perils of Success;
• Companies: Let a Thousand Brands Bloom;
• Energy: Not So Black;
• Transport: Paving the Way;
• Tourism: Up, Up, and Away;
• Agriculture: Have You Invested Yet?
• Health, Education, Housing: Serve the Masses;
• Emerging China: The People's Republic of Tomorrow; and
• Appendix.

Introduction: Catching the China Ride quickly sets the tone of the book by recapping some key points from his prior books. Again, reading his prior books is helpful, though not required, to appreciate better his current book. Jim lets you know that he is a big believer in China's future potential—so much so that he brought a Chinese nanny to teach his daughter Happy, born in 2003, Mandarin. Jim also informs you that he is not going to provide hot stock tips, but rather to help provide you with a start on your research. The companies he discusses may or may not be successful. They are merely starting points for you to do further research.

Investing: From Mao Caps to Small Market-Caps discusses the growth and evolution of China's markets. Of particular importance, Jim Rogers discusses The Chinese Alphabet Soup—A-Shares, B-Shares, H-Shares, S-Shares, N-Shares and ADRs, L-Shares, J-Shares, OTCBB, STAQ and NET.

Risk: The Perils of Success; discusses some of China's challenges and potential solutions.

In Chinese, the word "crisis" is made up of a combination of two characters. The first signifies "risk." The second stands for "opportunity."

China could face many crises up ahead. As an investor, the ones I need to examine most closely are those where potential risks—the fears they provoke, the solutions they require—have the best chance of creating value.

Believe it or not, I don't like taking chances when it comes to investing. The thrill of living on the edge has never been part of my portfolio. The same holds true for buying stocks in China, even if its people are among the biggest gamblers on earth. If you do your homework, buy cheap, and remain patient, you should be able to walk over and pick up that pile of cash in the corner that nobody else notices.

In this chapter, Jim highlights some military, infrastructure and environment concerns. He then goes on to describing several companies that might be well suited to addressing these challenges.

I should note that Jim provides several key facts about the scenario or situation before mentioning key companies where he provides a quick snapshot of each. This information serves as an excellent backdrop for your own research.

Companies: Let a Thousand Brands Bloom is short chapter where Jim teaches you that many companies in China are still at their infancy yet are already household names. He mentions Baidu (BIDU), a popular search engine in China, and Lenovo (LNVGY.PK), a popular computer manufacturer. Still more companies are unknowns waiting to be recognized. Which companies will emerge the Chinese equivalents of GE (GE), Oracle (ORCL), Johnson and Johnson (JNJ), and Sony (SNE)?

Energy: Not So Black focuses on companies that supply China's energy, whether it is hydro, coal, oil, or alternatives such as wind. Jim Rogers also discusses companies outside of China that might benefit from China's continued expansion. For example, Bucyrus International, Inc. (BUCY), a Wisconsin based manufacturer of heavy mining equipment, is well poised to benefit from China's needs.

Transport: Paving the Way discusses the transportation industry, from road paving and infrastructure to automotive companies.

Tourism: Up, Up, and Away is a chapter about tourism inside China as well as tourism for Chinese outside China. Of course, with greater affluence, Chinese will be enjoying tourism within their own country and in faraway places. Several companies poised to benefit from this trend are identified and discussed.

Agriculture: Have You Invested Yet? discusses how companies will benefit from China's growing appetite for better food and drink. Juice, farm seed, tractor, fast food, wine and other companies relating to the agricultural sector are discussed.

Health, Education, Housing: Serve the Masses focuses—not surprisingly—on healthcare.

As of 2004, China spent only 4.7 percent of GDP on health care, compared with 8 percent or more in developed countries (and 16 percent in the United States). In early 2007, as part of making health care a major priority, Premier Wen Jiabao announced the creation of a trial "co-operative medical service" throughout "80 percent of China" by 2010. The state will double subsidies to US$1.53 billion and offer small amounts to pay medical bills for all rural dwellers. This is a first step toward meeting huge increased demands of a population that isn't just currently underserved but that by 2020 will have 170 million people over sixty, in addition to the number with chronic illnesses. Old age pensions and other forms of social security will be bolstered by an added US$35.7 billion in 2007. At the same time, a finance vice minister announced that China will be actively encouraging more private investment in the health care industry, offering preferential tax policies to those who would help improve a nationwide system full of inefficiency and soaring costs. All this should mean benefits for emerging health care providers and those that invest in them.

Emerging China: The People's Republic of Tomorrow discusses other key themes that do not fit easily into the previous chapters. Some key themes that are discussed are high-tech, aerospace, internet, film, sport, plastic money, mobile phones, cable tv, publishing, retail and fashion, currency, and commodities.

Appendix discusses additional sources of information for you to do more research. Throughout all his books, Jim Rogers encourages you to play to your strengths. That is, if you have specialized knowledge in publishing, then follow this industry more closely in China because you are able to see more clearly the developing trends than the average person.

To help you down the road further, I've gathered in one place the best websites for Chinese listings, brokers, and China-related funds. These Internet resources will offer you the most current and reliable data. When it comes to the specific sectors or companies that seem most sound and compelling, your personal understanding, analysis and experience will have to point the rest of the way. As I've said: you do your research, pick the companies you like, and buy them, or you sit at home and watch the movies.

After all, China won't wait.

As mentioned, I have read all of Jim Rogers' books and thoroughly enjoyed each of them. Because I am a commodities bull, I found this book helpful in better understanding China's enormous growth. Moreover, I agree with Rogers in his assessment of China's growing importance. In summary, I highly encourage you to read A Bull in China: Investing Profitably in the World's Greatest Market.

Comments

[davidinchina]

Perhaps you should also read this FT book review. Mr Rogers may not be all he seems.


New market proves difficult to corner

By Jamil Anderlini

Published: January 10 2008 02:00 | Last updated: January 10 2008 02:00

On this Chinese version of the board game Monopoly . . . it's not a roll of the dice, but a corner on the best information, that will help you pass 'Go'," celebrity investor Jim Rogers asserts in his new book about investment in China.

Rogers is known for helping George Soros establish the Quantum Fund in the 1970s, for writing books such as Investment Biker and Hot Commodities and for predicting the bottoming-out and recovery of the Chinese stock market. Unfortunately, in this book, Rogers does not provide "a corner on the best information".

The title - A Bull in China - is somewhat misleading to start with, since Rogers upped sticks from the US to Singapore, rather than China. When I asked him recently why, if he is so bullish on the country, he doesn't live here, he replied that his family had planned to live in Shanghai until the shocking air pollution made them decide on far-flung Singapore instead.

The book reads like a combination of personal memoir, stock pick listings and historical explanation of the Chinese economic miracle. The style is breezy and intended to entertain but at times gets bogged down in trying to explain the complexities of the Chinese stock market.

The most interesting parts are the author's personal recollections of his first visit to China in the mid-1980s. Rogers provides a great description of buying a single share in a bank over the counter in Shanghai in 1986 before the Chinese stock markets had even been set up. He also describes trips on his motorbike across the country when many roads turned to sand or were washed away by floods.

Sadly, such anecdotes make up a small part of the book.

The underlying hypothesis is indisputable - that China will continue to grow and there will be lots of good investment opportunities in a range of industries - but this revelation comes two and a half years into a bull run in the Chinese stock market that has seen the benchmark index jump six-fold.

During a recent publicity tour Rogers made headlines by announcing that he was selling every US dollar asset he owned and buying China's renminbi assets. But when I asked what exactly he was buying he was less forthcoming. He conceded that prices in the Chinese real estate and stock markets were reaching bubble levels and no one should buy them now, but said he was not making direct investments in factories or unlisted local companies. Pressed a bit harder, he correctly pointed out that any foreigner can open a bank account in China and he was buying cash.

The renminbi is still not a freely convertible currency and, although it used to be much easier to buy renminbi than to exchange it for foreign currencies, in early 2007 the government ordered Chinese banks to restrict individuals' annual purchases of renminbi to the equivalent of $50,000, the same amount that can be changed into foreign currencies each year.

China has a thriving black market and extensive underground banking system but Rogers assured me he has not resorted to illegal means to buy renminbi. As a significant institutional investor, Rogers may be able to structure some sort of offshore, renminbi-based non-deliverable forward contracts with an investment bank but that is hardly an option available for individual investors wanting to get a piece of China.

At times, this book reads like a collection of analyst research notes with each section followed by an incomplete list of Chinese companies with stock codes and a quick blurb. Quite a few of the highlighted companies are domestically listed "A-shares", which individual foreign investors are not yet allowed to buy. At other times, the book reads like a history of China's capital markets. But much of the information is out of date and in some places inaccurate or misleading.

For instance, his explanation of the confusing Chinese stock market contains some key errors, such as an assertion that the proportion of shares in the market owned by the government dropped from 78 per cent in 2002 to less than 50 per cent by mid-2006. In fact, the state directly owned more like 50 per cent of all shares in 2002 and the proportion of state ownership in the market has risen since then following a spate of big state-owned enterprise listings.

To his credit, Rogers clearly believes in the China story he is selling in this book. But it doesn't take a financial wizard to be positive on the country's long term prospects and with the proliferation of books on offer from other old China hands there is little need to bother with this list of stock picks.

Copyright The Financial Times Limited 2008

[TAMR666]

VERY GOOD ANALYSIS.

[User 124892]

This bull, will be just another steer by the end of the year. Ready for ground beef.

[User 142738]

Jim Rogers' book gives you a look into China from a penthouse suite in Hong Kong and offers you quick money, freshly printed from the government-controlled Chinese money presses. There's a reason why this hypocrite moved to Singapore instead.

[wonderman]

What a wonderful comment on this book. I can't agree more !

[User 106508]

I just finished Roger's book and can't help compare it to Peter Navarro's "China Wars". Each depict 2 different views of China and both are probably right.

After reading Roger's book, I turned to the Appendix hoping to find a few places to purchase Chinese shares on one of their 3 exchanges but found no such information. I'm left to buy shares via ADR or the pink sheets.

KB

[thechinastory.org]

even worse, I don't know how to buy commodity from Hong Kong.

[Silver-Bullet]

Some very bullish and bearish comments from you folks - this is great! We need all the left fielders to give us as broad a perspective as possible.

I had personally lived in Asia for 20 years, specifically in Singapore, and watched the region grew. It has its flaws and its gems. Now having been in North America for the most part of my life, I can assure you, that Asia offers a dynamism unparalleled in most of the West.

There are numerous 'pot holes' along the way, however the pot of gold at the end is far too large for any coherent investor to ignore.

After reading 'Adventure Capitalist', I feel a sincere sense of candidness when Rogers described his encounters - this is invaluable ground level information that gives structure to objective thinking. I now look forward to the wealth of information he has to offer in 'A Bull In China'.